The Tuesday Market Minute
- Global stocks rebound following a move by the Commerce Department to ease restrictions on China's Huawei Technologies.
- Tech stocks gain on temporary reprieve for world's biggest equipment maker, but China's hit at reprisals, as well as the ongoing supply chain disruption, caps equity market gains.
- Oil edges higher amid ongoing concern over the escalating U.S. rhetoric towards Iran, with prices also supported by OPEC's signalling of extended production cuts.
- Wall Street futures suggest a firmer open to start to the trading day ahead retail sector earnings from Home Deport, Kohl's and Nordstrom as well as existing home sales data at 10:00 am Eastern time.
Global stocks snapped back Tuesday, reversing much of the previous day's decline, following a move by the Commerce Department to ease restrictions on China's Huawei Technologies ability to do business with U.S. firms that soothed investor concern of an all-out tech war between Washington and Beijing.
Commerce Secretary Wilbur Ross said Huawei will be able to access U.S. technology, and purchase equipment from American firms, in order to maintain existing network and update handsets, for up to 90 days. US firms, meanwhile, will use the time to source alternative suppliers and prevent domestic systems -- especially in rural areas -- from crashing.
The decision gave a modest single-day boost to stocks in Asia, with the MSCI ex-Japan index bouncing off a four-month low with a 0.13% gain while Japan's Nikkei 225 bumped 0.14% lower to close at 21,271.45 points.
U.S. equity futures look similarly solid, with contracts tied to the Dow Jones Industrial Average suggesting a 157 point opening bell gain and those linked to the S&P 500 indicating a 19.8 point advance for the broader benchmark ahead of quarterly earnings from retailers Home Depot (HD - Get Report) , Kohls' Corp. (KSS - Get Report) and Nordstrom (JWN - Get Report) .
Tesla Inc. (TSLA - Get Report) shares were hit with yet another bearish broadside Tuesday, as analysts at Morgan Stanley weighed in on the clean-energy carmaker's prospects in China and the health of its debt-laden balance sheet.
Tesla shares were marked 2.6% lower in pre-market trading Tuesday, following a 2.7% slide yesterday, to indicate an opening bell price of $200 each, the lowest since December 2016 and a move that extends the stock's year-to-date decline past 40%.
Home Depot (HD - Get Report) shares edged 0.55% higher after it posted stronger-than-expected first quarter earnings Tuesday, and confirmed its full-year earnings guidance, but unfavorable February weather hit same stores sales growth rates and capped gains for the world's biggest home improvement retailer.
European markets got an early boost from the U.S move to ease restrictions on Huawei, with semiconductor stocks rising firmly across the board and automakers posting solid gains in the hope that the temporary decision on sector tariffs will become permanent in around three month's time.
The Stoxx Europe 600 was marked 0.6% higher in the opening hours of trading in Frankfurt as a result, with Britain's FTSE 100 adding 0.67% as investors price stocks against a weaker pound sterling, which sat near a five-month low of 1.2694 against the U.S. dollar.
There was an uneasy aspect to the optimism, however, given China's hint of reprisals for the broader U.S. decision to lock Huawei out of U.S markets -- which accounted for around 15% of its $70 billion in business last year -- and pressure allies around the world to do the same.
"This is wrong behavior, so there will be a necessary response," China EU Ambassador, Zhang Ming, told Bloomberg late Monday. "Chinese companies' legitimate rights and interests are being undermined, so the Chinese government will not sit idly by."
That unease was stoked by the escalating rhetoric between the U.S. and Iran, which included comments from President Donald Trump heading into a rally in Pennsylvania last night in which he threatened to react with "great force" if Tehran were to attack U.S. interests in the Gulf region.
"I think Iran would be making a very big mistake if they did anything," Trump told reporters at the White House. "If they do something, it will be met with great force but we have no indication that they will."
Global oil prices extended gains in overnight trading on the remarks, as well as OPEC's indication that the cartel may carry over their agreed production cuts into the end of the year when ministers meet next month in Vienna.
Brent crude contracts for July delivery, the global benchmark for oil prices, were marked 34 cents higher from their Monday close in New York and changing hands at $72.31 per barrel while WTI contracts for the same month were seen 47 cents higher at $63.68 per barrel.